AC 210 Lecture 10: T Accounts

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silvercicada472

5 Jun 2018

School

University of Alabama

Department

Accountancy

Course

AC 210

Professor

Lisa Mc Kinney

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T Accounts

The simplest account structure is shaped like the letter T. The account title and account

number appear above the T. Debits (abbreviated Dr.) always go on the left side of the T,

and credits (abbreviated Cr.) always go on the right.

Accountants record increases in asset, expense, and owner's drawing accounts on the

debit side, and they record increases in liability, revenue, and owner's capital accounts

on the credit side. An account's assigned normal balance is on the side where

increases go because the increases in any account are usually greater than the

decreases. Therefore, asset, expense, and owner's drawing accounts normally have

debit balances. Liability, revenue, and owner's capital accounts normally have credit

balances. To determine the correct entry, identify the accounts affected by a

transaction, which category each account falls into, and whether the transaction

increases or decreases the account's balance. You may find the following chart helpful

as a reference.

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Document Summary

Accountants record increases in asset, expense, and owner"s drawing accounts on the debit side, and they record increases in liability, revenue, and owner"s capital accounts on the credit side. An account"s assigned normal balance is on the side where increases go because the increases in any account are usually greater than the decreases. Therefore, asset, expense, and owner"s drawing accounts normally have debit balances. Liability, revenue, and owner"s capital accounts normally have credit balances. To determine the correct entry, identify the accounts affected by a transaction, which category each account falls into, and whether the transaction increases or decreases the account"s balance. You may find the following chart helpful as a reference. Occasionally, an account does not have a normal balance. For example, a company"s checking account (an asset) has a credit balance if the account is overdrawn. The way people often use the words debit and credit in everyday speech is not how accountants use these words.

Related Questions

D. Haas, a physical therapist, opened Haas's Clinic. His accountant provided the following chart of accounts: Assets Revenue Cash Professional Fees Accounts Receivable Office Equipment Expenses Office Furniture Salary Expense Rent Expense Liabilities Utilities Expense Accounts Payable Miscellaneous Expense Owner's Equity D. Haas, Capital D. Haas, Drawing The following transactions occurred during July of this year: Haas deposited $34,000 in a bank account in the name of the business. Bought filing cabinets (Office Equipment) on account from Muller Office Supply, $670. Paid cash for chairs and carpeting (Office Furniture) for the waiting room, $825, Ck. No. 1000. Bought a photocopier from Rob's Office Equipment, $770, paying $285 in cash and placing the balance on account, Ck. No. 1001. Received and paid the telephone bill, which included installation charges, $180, Ck. No. 1002. Sold professional services on account, $2,765. Received and paid the bill for the state physical therapy convention, $495, Ck. No. 1003 (Miscellaneous Expense). Received and paid the electric bill, $245, Ck. No. 1004. Received cash on account from credit customers, $1,585. Paid on account to Muller Office Supply, $360, Ck. No. 1005. Paid the office rent for the current month, $1,365, Ck. No. 1006. Sold professional services for cash, $2,395. Paid the salary of the receptionist, $990, Ck. No. 1007. Haas withdrew cash for personal use, $1,470, Ck. No. 1008. Requirements: Under each of the following T accounts, select either a plus or minus sign on the left side to indicate whether a Debit increases or decreases the classification or account and select either a plus or minus sign on the right side to indicate whether a credit increases or decreases the classification or account. Record the amounts in the proper positions in the T accounts. Record the amounts in the order given (letters 'a' through 'n'). Foot the T accounts and show the balances.

ultramarinemouse823

1. Accounts are classified in the ledger

a. chronologically

b. alphabetically

c. in accordance with their appearance in the financial statements

d. so that accounts used most often are listed first

2. Which of the following accounts is an owner's equity account?

a. Cash

b. Accounts Payable

c. Prepaid Insurance

d. Ross Morris, Capital

3. The debit side of an account

a. depends on whether the account is an asset, liability, or owner's equity

b. can be either side of the account depending on how the accountant set up the system

c. is the right side of the account

d. is the left side of the account.

4. Which statement(s) concerning cash is (are) true?

a. cash will always have more debits than credits

b. cash will never have a credit balance

c. cash is increased by debiting

d. all of the above

amaranthpanda447

During February of this year, H. Rose established Rose Shoe Hospital. The following asset, liability and owner's equity accounts are included in the charts accounts:

Cash Accounts Payable

Shop Equipment H. Rose, Capital

Store Equipment Income from Services

Office Equipment Advertising Expense

The following transactions occurred during the month of February:

a. Rose deposited $25000 cash in a bank account in the name of the business.

b. Bought shop equipment for cash, $1525, Ck.No 1000.

c. Bought advertising on account from Milland Company, $325.

d. Bought store shelving on account from Inger Hardwarde, $750.

e. Bought office equipment from Shara's Office Supply, $625, paying $225 in cash and placing the balance of acount, ck. no 1001.

f. Paid on accounnt to Inger hardware, $750, ck.no 1002.

g. Rose invested his personal leather working tools with a fair market value of $800 in the business.

h. Sold services for the month of February for cash, $250.

Required

1. Write the account classifications(Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit.

2. Write the account names on the T accounts under te classifications, place the plus and minus signs for each T account, label the debit and credit sides of the T accounts.

3. Record the amountsin the proper positions in te T accounts. write the letter next to each entry to identify the transaction.

4. Foot and balance the accounts.

Cash Balance: $22,750

ivoryllama342

AC 210 Lecture 10: T Accounts

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